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A Correlational Study On Internal Control System Efficiency And Operational

Sustainability Of Selected Savings And Credit Cooperatives In The Camanava
Area Of Metropolitan Manila

Article · May 2018

DOI: 10.18535/ijsrm/v6i5.em09

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International Journal of Scientific Research and Management (IJSRM)
||Volume||06||Issue||05||Pages||EM-2018-420-430||2018||
Website: www.ijsrm.in ISSN (e): 2321-3418
Index Copernicus value (2015): 57.47, (2016):93.67, DOI: 10.18535/ijsrm/v6i5.em09

A Correlational Study on Internal Control System Efficiency and

Operational Sustainability of Selected Savings and Credit Cooperatives in
The Camanava Area Of Metropolitan Manila
Carl Mark B. Miniano1, Maria Christina P. Concepcion2
1
Business and Economics Department, Modern College of Business and Science
Al-Khuwair 133, Muscat, Sultanate of Oman
Carl.Miniano@mcbs.edu.om
2
College of Business Administration, Adamson University,
900 San Marcelino Street, Ermita 1000, Manila, Philippines

Abstract:
The research delved on determining the relationship between internal control system efficiency and
operational sustainability of selected savings and credit cooperatives in CAMANAVA Area, Metropolitan
Manila, Philippines. The descriptive research method was utilized employing both quantitative and
qualitative approaches. Survey questionnaires, in-depth personal interview, and focused group discussions
(FGDs) were used to gather relevant data from selected employees/staff, committee members and
executive officers of the subject savings and credit cooperatives. Quantitative data were statistically
processed using Analysis of Variance (ANOVA) and Pearson Correlation Coefficient (Pearson’s r).
Qualitative data were coded, patterns and relationships analyzed, and findings summarized into themes.
The result of the study revealed that the internal control system of savings and credit cooperatives
specifically in terms of the control environment, risk assessment, information and communication, control
activities, and monitoring have a strong relationship with the cooperatives’ operational sustainability,
particularly in political, economic, social, technological, and legal aspects. The study further revealed that
the cooperatives face certain problems in the areas of employee recruitment and selection, innovation,
credit investigation, and complaints handling.

Keywords: Savings and Credit Cooperative, Internal Control System, Operational Sustainability.
Based on the capitulation of cooperative’s annual
1. Introduction report, however, CDA claimed that only about 50
Sharma (2010) asserted that the aspiration of saving percent of the more than 70,000 registered
and credit cooperative (SCC) has always been to cooperatives in 2005 are operating. These alarming
marshal savings from middle and low -income figure serves as one of the pressing reasons for the
groups and cater credit to its members. Saving and conduct of this study.
Credit Cooperatives have even developed to be
colossal than some rural and thrift banks and have 2. Review of Related Literature
contributed small borrowers with decisive substitute
to informal moneylenders in disparate society. 2.1 Saving and Credit Cooperative
According to the Philippine’s Cooperative
Development Authority, there are approximately Savings and Credit Co-operatives are community
70,000 registered cooperatives by December 2005 membership based financial institutions that are
with much defined data as regards to the condition formed and owned by their members in promotion
of operations and financial performance of these of their economic interests (Nuwagaba, 2012). They
cooperatives. are promoted not only for money; they contribute to
the promotion of total human development of their

Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in] EM-2018-420
members, they uplift the lives of their members by
promoting self-advancement and providing
leadership. Savings and credit cooperatives are user
owned financial intermediaries. They have many
names including credit unions, Savcos, Saccos, etc.
Members typically share a “common bond” based on
a geographic area, employer, community, or other
affiliation (Betru, 2010). Savings and Credit
Cooperatives offer services such as money transfers,
bills payment etc. As financial institutions, they can
raise their funds internally (self-financing) and
externally (outside financing). However, Savings
and Credit Cooperatives are basically advised to
finance themselves internally from members’
savings, share mobilization and retained earnings, to
avoid interference of decision on the cooperatives
issue by fund owners, to be self-secured and
sustainable in the future.
Oluyombo (2010) expounded that cooperative
societies are privately organized association of
individuals of like minds who come together to
operate a savings and loan program among
themselves. Members joined together and pool their
resources so that they can benefit savings and loan to
themselves. They also contribute to building social
capital and providing opportunities for effective
collective action. By mobilizing local savings
through mutual trust, local knowledge, inexpensive
human resources, and social networks within
communities, cooperatives use the assets of the poor
that otherwise remain unutilized. The non-profit
orientation of savings and credit cooperatives are
important because they aim at providing affordable
financial services such as savings accounts and or
loans and it is service and not profit that drives
them.
2.2 Benefits from Savings and Credit
Cooperatives.
Through the help of savings and credit
institutions, those individuals and families in the
lower and middle sector have their way of improving
their lives by investing their income to gain more or
to seek help by availing affordable credit services of
cooperative such as savings and credit cooperative.
According to Mwakajumilo (2011), credit unions
currently serve an estimated 120 million members in
87 countries around the world, helping members
increase their incomes, build wealth and security and
provide homes for their families. In other words, if
savings and credit cooperatives are not beneficial it
will not be patronized by millions of individual
around the globe. It also helps to improve the life of
Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in]
its members through their effective and efficient
programs and coordination by members and
management.
Wameyo (2011) emphasized that savings and
credit cooperatives help people to save. As a
member you are usually required to contribute a
certain amount of money towards your savings. You
all know how it is hard to save especially if you do
not have a specific goal in mind. But with it you can
continuously keep on saving until the day that you
will come up with an idea for something. It could be
a business, buying land, a house etc. It is also much
easier to secure a loan from a saving and credit
cooperative as opposed to other financial
institutions. As a member, you are usually entitled to
getting a loan that is usually worth a certain number
of times the value of your deposits. In addition to the
ease of acquiring a loan, the interest charged on the
loans is usually much cheaper than financial banks.
2.3 Challenges Faced by Savings and Credit
Cooperatives
Members’ participation is the determinant factor
for the sustainable growth of cooperatives. If no
active member participation, there will be no
successful savings and credit cooperatives; it is on
the management and staff responsibilities to take
charge and have sense of volunteerism for them to
succeed because if not they may face profit loss or
bankruptcy. According to (Mahmud 2008), 78.7% of
the members became a member in cooperatives
forcefully by cooperative promoters. As a result, the
members were not aware of the benefits, duties, and
rights they have in the cooperative societies. Largely
the participation of members was weak, because
there is no proper orientation for the new members.
Poor participation due to lack of capacity and
incentives was identified as a barrier in cooperatives
functional performances. A lack of savings is a
major bottleneck to growth for some savings and
credit Cooperatives. (Allahdadi & Aref, 2011)
In his research, Tesfamariam (2011) also stated
certain factors affecting sustainability of savings and
credit cooperatives such as lack of awareness and
poor saving culture, weak governance, policy and
regulatory environment, weak institutional capacity,
low capital base, and inappropriate loan security
requirements.
With regard to Internal Control System, staff or
employees face poor members’ participation and the
severe shortage of capital misuse by selected
EM-2018-421
committees, misappropriation by leaders, poor
administrative skills, and irresponsible lending to
members, and limited access to banking services too
long periods between audits (UN, 2011).
Webb (2010) suggested that creating cooperative
capital funds offers one capital alternative for
cooperative sustainability. Capital funding is weak
as the fund relies on contributions from other
cooperatives. These cooperative funds do serve a
purpose, but do not offer national stabilization or
sustainability to credit unions or cooperatives
(Zuckerman 2012).
Deeb (2016), underscored the bad management
has caused organizations to permanently close their
doors. Poor leadership results to high turnover of
employees; the cost of recruitment and training
becomes prohibitive, which can impact a business's
ability to continue operations. Bad management may
also affect the coffers directly, if company funds are
mismanaged or the budget is overextended in
comparison with revenues earned. Without sufficient
business reserves, you may not be able to absorb
consistent losses, and your organization can fail. In
other words, cooperatives should have programs to
train staffs and employees for the effective
production and operation of an organization.
However, the human resource should pay close
attention when it comes to hiring employees. For an
organization to be successful it should have
competitive employees and staff.
3. Methodology
The research utilized a combination of quantitative
and qualitative methodologies. Pearson Correlation
Coefficient was used in determining the relationship
between the efficiency of internal control system and
the operational sustainability of the savings and
credit cooperatives. Significant differences in
respondents’ perception were determined through
the use of the Analysis of Variance (ANOVA).
Weighted Mean was used to determine the central
tendencies of the respondents’ perception on the
efficiency of the Internal Control System in the areas
of control environment, risk assessment, information
& communication, control activities and monitoring.
Respondents were also asked to assess the
cooperatives’ political, economic, social,
technological and legal sustainability.
Focus Group Discussion (FGD) and in-depth
personal interview were utilized in determining the
challenges and problems faced by the cooperatives
Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in]
with respect to internal control system efficiency and
operational sustainability. Executive officers,
committee members, and employees/staff of the five
savings and credit cooperatives from the cities of
Manila, Caloocan, Malabon, and Valenzuela in the
Greater Metropolitan Manila Area were included as
respondents of the study.
4. Results and Discussion
4.1 Savings and Credit Cooperatives’ Internal
Control System Efficiency
Internal Control System refers to the process by
which organizations maintain environments that
encourage incorruptibility and deter fraudulent
activities by management and employees (James,
2015). Adesalu (2016) meanwhile, emphasized that
internal control has different definitions, but the
most widely accepted is that it is a statement of
accounting standard. He further referred to it as not
only internal check and internal audit, but also a
whole system of control. These include financial and
all those initiatives that were established by the
management to orderly carry on with the
cooperative’s operations. Jones (2012) suggested
that, in order to improve the internal control system
there is a need to determine the problems correlated
to it so that restorative conducts can be captured.
Moreover, he asserted that a weak internal control
system is caused by the following: (1) intimidation
and interference; (2) inadequate audit staff; (3)
inadequate logistics; (4) disregard to accounting
standards; and (5) indifferent attitude.
While all the variables under the internal control
system were assessed as efficient, an emphasis on
the control environment, which registered the
highest mean of 3.47 could be very well noted. This
could be construed that the subject cooperatives
have been efficient in the implementation of their
internal control system, which includes Control
Environment, Risk Assessment, Information and
Communication, Control Activities and Monitoring.
Dickens (2011) asserted that control environment is
the groundwork for all other elements of internal
control that administer self-restraint and formation,
which sets the mood of an organization by
manipulating the control sensibility of its
administration.
The results also suggest that in terms of Control
Environment, the cooperatives were able to ensure
that the ethical standards, core values and
cooperative principles and by-laws were fully
EM-2018-422
observed and complied by their executives, staff and for both groups of respondents. This means that
committee members. The result further reveals that there is still more room to improve in the monitoring
the cooperatives surveyed were efficient in aspect particularly in the way of providing internal
identifying the various risks and hazards that the and external feedback, regularly conducting
cooperatives have been exposed with and, they were performance review and the evaluation of the
able to establish safeguards that would reduce if not various processes of the cooperatives
totally prevent those risks from taking place.
4.2 Savings and Credit Cooperatives’
The cooperatives were also efficient in ensuring Operational Sustainability
that communication accurately runs through the Table 2: Cooperatives’ Operational Sustainability
organization in a timely fashion, making every Operational Executive Members Employees/
member well knowledgeable of existing Sustainabilit Officers of Staff
organizational situation and clearly guided in their y Committee
decisions and actions. Mean Int. Mean Int. Mean Int.
Political 3.70 VH 3.50 H 3.77 VH
Table 1: Efficiency of the Cooperatives’ Economic 3.12 H 3.50 H 3.33 H
Internal Control System Social 3.04 H 3.50 H 3.26 H
Internal Executi Membe Emplo Averag Technological 3.02 H 3.50 H 3.26 H
Control ve rs of yees/ e Legal 3.44 H 3.50 H 3.54 VH
System Officer Commi Staff
Composite 3.26 H 3.50 H 3.43 H
s ttee
Mean
Me I Me I Me I Me I
3.51-4.00 –Very High (VH); 2.51-3.50-High (H);
an n an n an n an n
1.51-2.50-Moderate (M); 1.00-1.50-Low (L)
t. t. t. t.
Control 3.3 E 3.5 E 3.5 E 3.4 E Table 2 shows that the cooperatives surveyed have
Environ 2 0 4 E 7 very high political sustainability as deemed by its
ment executive officers and employees based on the
Risk 3.0 E 3.5 E 3.4 E 3.3 E registered mean of 3.70 and 3.77 respectively.
Assessm 6 0 6 3 Political sustainability in this context is seen as the
ent capability of the cooperatives to comply with
Informati 3.1 E 3.5 E 3.4 E 3.3 E government regulations in terms of tax policy, labor
on and 8 0 6 7 law, trade restrictions, etc.
Commun
ication The best manifestation of the cooperatives’
Control 3.2 E 3.5 E 3.4 E 3.4 E political sustainability were their ability to comply
Activitie 4 0 8 0 with all the rules and regulations prescribed by the
s Cooperative Development Authority (CDA). As a
Monitori 3.0 E 3.5 E 3.3 E 3.3 E business entity, cooperatives ensure that all the rules
ng 6 0 9 0 and regulations set by the Cooperative Development
Over-all 3.1 E 3.5 E 3.4 E 3.3 E Authority are strictly followed since it is their
Mean 7 0 7 7 juridical obligation. Non-compliance can result to
3.51-4.00 Extremely Efficient; 2.51-3.50 Efficient; legal fees and sanctions by the government. It will
1.51-2.50 Fairly Efficient; 1.00-1.50 Not Efficient also result to the negative publicity for the
cooperatives. Bush (2016) emphasized that legal
Ratcliffe and Landes (2009) underscored that the factors are also external factors relating to the laws,
control environment is the foundation for all other regulations, directives and the likes that actually
components of internal control. It provides affect how business operates and how
discipline and structure as it sets the tone of an customers/clients behave.
organization by influencing the control
consciousness of its people. Hill (2013) opined that management maybe
tempted to cut corners in pursuit of profit, such as
While it is still considered efficient, the area of not fully complying with certain governmental
monitoring emerged to have the lowest mean value regulations. The penalties for being caught can be

Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in] EM-2018-423
severe, including legal fees and fines or sanctions by respondents’ position, they were unified at claiming
governmental agencies. The resulting negative that the cooperatives maintained an efficient internal
publicity can cause long-range damage to the control system. The fact that the cooperatives were
company’s reputation that is even more costly than registering good financial position, and continuously
the legal fees or fines. Simiyu (2017) on the other growing in revenues are good manifestation
hand, remarked that if companies comply with all supporting these results.
the legal requirements, they avoid legal battles in
court and will save business time and money. He Table 3: F-Test Result on Respondents’ Perception
further added that legal compliance saves of the Cooperatives’ Internal Control System
organizations from the negative publicity that comes Efficiency
with legal battles due to non-compliance. Intern Positi Me SD Com Si Interpr
The results also revealed that among the different al on an pute g etation
areas, it is in technical sustainability that the Contr d F-
cooperatives registered the lowest mean value of ol valu
3.19. This can be construed that though cooperatives Syste e
have the capability to do technological upgrading, it m
might be too expensive for them to be closely Contro Execu 3.3 0.5 0.75 0. Not
adapting the technological trends considering that l tives 2 8 48 Signific
their business transactions were not complicated Enviro Com 3.5 0.7 ant
enough to warrant such adaption. Most if not all nment mittee 0 0
cooperatives surveyed were observed to have the Empl 3.5 0.3
basic office equipment and devices with some help oyees 4 7
from computer soft wares that are being used for Risk Execu 3.0 0.5 2.61 0. Not
data management and transaction processing. Assess tives 6 1 09 Signific
ment Com 3.5 0.7 ant
Interestingly, the results also point out that
mittee 0 1
cooperatives were highly sustainable economically,
Empl 3.4 0.4
this simply means that the cooperatives can easily
oyees 6 0
collect accounts and loans in an effective and
efficient manner and have shown a steady growth in Inform Execu 3.1 0.5 1.19 0. Not
their earnings. Consequently, this will bring ation tives 8 5 32 Signific
confidence to the members, as they will comfortably & Com 3.5 0.7 ant
feel that their savings will gain a good return. This Comm mittee 0 1
will further result into increased availment of the unicati Empl 3.4 0.4
loan portfolios and provide encouragement to other on oyees 6 0
people to join the cooperatives. This finds support Contro Execu 3.2 0.6 0.76 0. Not
with Hill (2013) stating that having a loyal customer l tives 4 2 48 Signific
base is one of the keys to long-range business Activit Com 3.5 0.7 ant
success because serving an existing customer does ies mittee 0 1
not involve marketing cost, compared with acquiring Empl 3.4 0.4
a new one. oyees 8 1
Monit Execu 3.0 0.6 1.11 0. Not
4.3 Analysis of Variance on Respondents’ oring tives 6 8 35 Signific
Perception of Cooperatives’ Internal Control Com 3.5 0.7 ant
System Efficiency mittee 0 1
Empl 3.3 0.3
Table 3 illustrates the analysis of variance on oyees 9 5
respondents’ assessment of the Internal Control Over- Execu 3.1 0.5 2.07 0. Not
System when they are classified based on their all tives 7 5 15 Signific
position. The result of the F-test showed no Com 3.5 0.7 ant
statistical significance among the areas of control mittee 0 1
environment, risk assessment, information and Empl 3.4 0.3
communication, control activities and monitoring. oyees 7 7
This simply means that regardless of the
Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in] EM-2018-424
 was consistent across the cooperatives surveyed.
Although all factors under the variable Gleaning from this result the prospect of
“Monitoring” were considered efficient, the cooperatives will be bright as long as the executives
appropriateness of information reported to and employees of the cooperatives will perform the
management versus the actual results of operations requisites indicated in the different aspects of
in every unit and department are most considered in sustainability covered by this study.
monitoring the activities of the cooperatives with the
3.50 weighted mean value. Middle and lower 4.5 Relationship Between Internal Control
management ensure that all the information they System Efficiency and Operational
send to upper management is in accordance with the Sustainability of Savings and Credit
actual result of cooperatives’ performance, because Cooperatives
it helps the management in monitoring the
attainment or achievement of strategic goals and Results show that there is a strong positive
organizational objectives. Those also give them relationship between the efficiency of Internal
hints on the actions that need to be taken with regard Control System and Operational Sustainability of the
to the day-to-day operations. surveyed cooperatives. This implies that as the
efficiency of internal control system increases, the
4.4 Analysis of Variance on Respondents sustainability of the Savings and Credit
Perception of the Cooperatives’ Operational Cooperatives also increase. Therefore, the
Sustainability sustainability of the cooperatives can be achieved if
there is strong efficiency in the internal control
Table 4: Result of F-Test on Respondents’ system specifically in terms of control environment,
Perception of the Cooperatives’ Operational risk assessment, control activities, information and
Sustainability communication, and monitoring.
Sustainabilit Position Mean SD Computed Sig Interpretation
y F-value Table 6: Correlation Between Internal Control
Political Executives 3.70 0.61 0.31 System
0.74 Efficiency
Not and Operational Sustainability
Committee 3.50 0.71 ofSignificant
Savings and Credit Cooperatives
Employees 3.77 0.36 ICS Sustai r Sig Interpretation
Economic Executives 3.12 0.69 0.59 Efficienc
0.56 nabilit
Not
Committee 3.50 0.71 y y
Significant
Employees 3.33 0.51 Control Politica 0.5 0.0 Significant
Social Executives 3.04 0.72 0.68 Environm
0.52 l
Not 2 0
Committee 3.50 0.71 ent Significant
Econo 0.6 0.0 Significant
Employees 3.26 0.53 mic 8 0
Technological Executives 3.02 0.63 1.04 0.37 Social
Not 0.6 0.0 Significant
Committee 3.50 0.71 Significant 8 0
Techno 0.7 0.0 Significant
Employees 3.26 0.43
logical 9 0
Legal Executives 3.44 0.69 0.11 0.90 Not
Legal 0.7 0.0 Significant
Committee 3.50 0.71 Significant
4 0
Employees 3.54 0.46
Risk Politica 0.4 0.0 Significant
Over-all Executives 3.26 0.61 0.52 0.60
Assessme Not
l 5 1
Committee 3.50 0.71 nt Significant
Econo 0.5 0.0 Significant
Employees 3.43 0.32 mic 9 0
Social 0.6 0.0 Significant
Table 4 exhibits the computed F-test for the 4 0
cooperatives sustainability with respect to political, Techno 0.7 0.0 Significant
economic, social, technological and, legal factors. logical 2 0
When grouped according to position, no significant Legal 0.5 0.0 Significant
difference was found. This means that as perceived 0 1
by the respondents, the sustainability outlook of the
Informati Politica 0.5 0.0 Significant
cooperatives is generally high and the assessment
on & l 9 0
Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in] EM-2018-425
 Communi Econo 0.6 0.0 Significant it will result to an excellent flow of activity within
cation mic 4 0 the cooperatives and will retain loyal members and
Social 0.6 0.0 Significant that what makes them sustainable for a long-range.
4 0
Techno 0.7 0.0 Significant Going further into the results, no significant
logical 3 0 relationship was noted in terms of “Monitoring” and
Legal 0.7 0.0 Significant its relations with the Political, Economic, Social,
1 0 Technological and Legal aspect of sustainability.
Control Politica 0.4 0.0 Significant This result is contrary to the common notion that a
Activities l 5 1 closer monitoring of the different external factors
Econo 0.5 0.0 Significant affecting the organization will help it appropriately
mic 6 0 react to the prevailing conditions. The matter was
however clarified by the key informants stating that
Social 0.7 0.0 Significant
the Monitoring System employed by the
2 0
cooperatives are more geared toward the internal
Techno 0.7 0.0 Significant
processes of its operations rather than their external
logical 4 0
dealings and initiatives.
Legal 0.6 0.0 Significant
9 0
4.6 Issues and Concerns Affecting the Internal
Monitori Politica 0.2 0.1 Not Significant Control System Efficiency and Operational
ng l 9 2 Sustainability of the Savings and Credit
Econo 0.3 0.0 Not Significant Cooperatives
mic 5 6
Social 0.3 0.1 Not Significant
1 0 Table 7 presents the resulting themes extracted
Techno 0.3 0.0 Not Significant from the responses of selected informants in this
logical 2 9 study.
Legal 0.1 0.5 Not Significant
2 4 Table 7: Themes on Issues and Concerns Affecting
Over-all Politica 0.6 0.0 Significant the Cooperatives Internal Control Efficiency and
l 3 0 Operational Sustainability
Econo 0.8 0.0 Significant Themes Defining Element Key
mic 6 0 Informant
Social 0.8 0.0 Significant Deviation
84 0 from Conclusive Policy for Key
Techno 0.7 0.0 Significant employee Human Resources Informant
logical 6 0 recruitment 1
Legal 0.5 0.0 Significant policies Insufficient Job
9 0 Descriptions Key
Informant
To ensure efficiency in internal control system, Conflict of Interest 6
Unisys (2017), suggested the following; first,
ensuring the reliability of financial reports, second, Key
compliance with laws and regulations on business Informant
activities, and, third, preservation of company assets. 9
Opiyo (2017) also suggested that effective, credible Low Neglect development Key
and sustainable internal control system plays an Innovation on operation Informant
important role in any private business entity. Besides Drive & 2
ensuring achievement of core objectives, effective Capability Inefficient use of
and credible internal controls adherence, reinforces resources Key
and, improves the confidence of both current and Informant
prospective internal and external customers. In other Utilizing alternative 4
words, if there is an efficient internal control system, means in doing things

Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in] EM-2018-426
 Key Key Informant 6: “Sa palagay ko, dapat meron
Informant talagang job description. Tapos yung aplikante
5 dapat may alam talaga at experience para
Ineffective masigurado na qualified yung aplikante para sa
credit Member suffers the Key posisyon o trabaho.” (I think there should be a job
investigation risk of being co- Informant description and the applicant should really possess
procedure maker. 3 skills necessary for the job and experience to make
sure that hired applicant is really qualified.)
Financial difficulty of
members. Key Key Informant 9: “Marami kasing isyu na
Informant kumakalat katulad ng paghahire ng mga
Other credit of 7 employees. Minsan kasi nagkakataon na pinipili ng
member to other HR yung kanilang kamag-anak kaysa mas may
financial institution. Key experience na applicant”.(There are some issues
Informant circulating, especially on hiring of employees.
8 Sometimes, there are instances that HR selects their
Weak Failure to handle relatives rather than a job applicant who has an
complaints complaints. Key experience.)
handling Informant
capability 10 Theme 2: Low Innovation Drive and Capability
A couple of the key informants emphasized that
there is very low concept of innovation and
After analyzing patterns and relationships of the continuous improvement in the saving and credit
qualitative responses, four major themes emerged as cooperative surveyed. They have pointed out the
the factors that affected the cooperatives’ internal observable neglect in creating various ways and
control system efficiency and operational means to improve the cooperatives’ operation, there
sustainability, to wit; Deviation from employee was also evidence of resources being inefficiently
recruitment policies, Low innovation drive and used and, the lack of drive to utilize alternative ways
capability, Ineffective credit investigation of doing things.
procedures and Weak complaints handling
capability. Key Informant 2: “Ang pinakaproblema kasi na
na-observe ko ay wala talagang platform ang
Theme 1: Deviation from Employee Recruitment management para sa ikakaganda pa ng coop namin.
Policies Eh alam naman natin na maraming bago ngayon.”
The following are the perceptions of the managers, (Based on my observation, there is no sufficient
committee and staff with regard to hiring of platform for the development of our cooperative. We
employees in their company. all know that there are numerous trends as of now.)
Key Informant 4: “Ang concern ko lang sa
Key Informant 1: “Siguro hindi talaga malinaw kooperatiba naming, kailangan talaga maging all-
ang mga guidelines at policies ng HR kasi wala around lalo na ngayon madaming demand siyempre
naman silang specific na criteria sa pagpili ng mga ang mga member”(My only concern to our
applicant. Kaya lahat puwede ma-hire kahit hindi cooperative is that the management need to be
naman talaga qualified. Kahit hindi pasok yung flexible most especially there are lots of demands
natapos, tanggap basta kakilala. Kaya yung from the member)
outcome hindi maganda.”(I think there were no Key Informant 5: “Ang nakikita kong problema ng
clear policies and guidelines defined by HR coop namin yung wala kaming bagong services di
management in terms of recruitment. That’s why tulad ng kapag nagtatanong ako sa mga ibang coop
everybody has a chance to be hired even though one kaya sila lalong nalaki at na asenso kasi lagi silang
is not qualified; if they are related to the may bago”(The problem with our cooperative is that
management, they will surely hire. That’s why the we don’t have new methods or services unlike when
result is not that good”) I ask other cooperatives, they have always new
services that’s why they are progressive and
successful.)

Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in] EM-2018-427
Theme 3: Ineffective Credit Investigation
Procedure
Cooperatives survive based on the effectiveness
and efficiency of its collection system. It is essential
for the cooperative to receive its loans and other
receivables in time for the productivity and
operation of cooperatives. According to Insight
(2013), collections are an important service that
helps to maintain clients at the same time free up
money for lending again. It is a strategic process that
is key to generating good habits and a payment
culture among clients. It can also be seen as a
business activity whose primary objective is to
generate returns for the institution, converting losses
into income.
Key Informant 3: “Kalimitan sa mga kapwa ko
member na nag aavail ng service ng kooperatiba ay
mga walang permanenteng trabaho. Kaya minsan
delay kami magbayad yung iba pa hindi na talaga
nag babayad ng utang kaya minsan kawawa kami
dahil kaminng mga co maker ang
nagbabayad.”(Majority of my co member who
availed services from cooperative doesn’t have
permanent jobs. That’s why our payment is delayed
or sometimes they didn’t even pay their debts that’s
why it’s hard for us because we as co maker who
pay their debts.)
Key Informant 7: “Madami sa amin utang lang ng
utang pero walang savings kaya pinipilit din talaga
kami ng coop namin na mag save. Kaso wala talaga
eh.”(Most of us are just taking loans but we don’t
have enough savings that’s why cooperatives are
pushing us to save but there’s really nothing to
save.)
Key Informant 8: “Sa tingin ko kaya late magbayad
ang ibang member dahil wala „to sa priority nila.
Ang isa pang mahalagang dahilan ay maaaring ang
ibang member ay may iba pang mga loan sa ibang
firm na may mas mahigpit na rule sa loan. Kaya
inuuna muna silang bayaran. Siguro dapat maging
mahigpit ang coop sa simula pa lamang upang
maiwasan ito”.(Basically cooperative may not be
ranked at the top of our customer’s payment priority
list. Another important reason may be is that
customer has other loan from other firm that has
more stringent credit criteria. So, the customer pays
for it first. Maybe the cooperative should be rigid
from the very beginning to avoid this scenario).
Theme 4: Weak Complaints Handling Capability
Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in]
Top performing companies understand an
important role that customers’ feedback plays in
business. Customer feedback and complaints as
information provided by clients about whether they
are satisfied or dissatisfied with a product or service
and about general experience they had with a
company. Their opinion is a resource for improving
customer experience and adjusting actions to their
needs. Moreover, these are the perceptions of the
staffs, manager, and committee with regards to
customer’s feedback and complaints.
Key Informant 10: “Sa totoo lang, madami talaga
kami reklamo kasi parang wala naman kaming
sistema eh, hindi din nila alam pano handle yung
mga concerns naming mga members. (To be honest,
we have numerous complaints and we do not have a
defined system in place for handling complaints and
concerns.)
5. Conclusion
Based on the result of the study, it is concluded
that a significant relationship exists between the
cooperatives’ internal control system efficiency and
its sustainability. Savings and Credit Cooperatives
could therefore become politically, economically,
socially, technologically and legally sustainable if
they become efficient in performing their control
mechanisms, risk management, information and
communication within their operations.
6. References
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[18] Microfinance Council of the Philippines,
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Author Profile
Carl Mark B. Miniano, Ph.D., DBE
Dr. Carl Mark Miniano is currently the Head of the
Business and Economics Department at the Modern
College of Business and Science (MCBS) in Muscat,
Oman. He was previously the Dean of the College of
Business Administration at Adamson University in
Carl Mark B. Miniano, IJSRM Volume 06 Issue 05 May 2018 [www.ijsrm.in]
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Manila, Philippines from the year 2010-2017. In the
year 2015, He was conferred the title Diplomate in
Business Education by the Philippine Academy of
Professionals in Business Education.
Maria Christina P. Concepcion, Ph.D.
Dr. Maria Christina Concepcion is a Lecturer in
Management at the College of Business
Administration of Adamson University in Manila,
Philippines where she also completed her Master in
Business Administration and Ph.D. in Management
Degree.
EM-2018-430